SHEWARAM VS.

PHILIPPINE AIRLINES 
17 SCRA 606 (1966)
Zaldivar, J

FACTS:
Parmanand Shewaram, a Hindu from Davao, boarded a PAL plane bound for Manila from
Zamboanga. He checked in 3 baggages: a suitcase and 2 other bags. PAL’s personnel
mistagged his baggage to “Iligan” instead of “Manila.”

The baggage was said to be tampered when it was found. Among his baggage was a camera
with P800.00 and it was lost. PAL offered to pay P100.00. Shewaram wanted full payment of
P800.00. 

A PAL ticket, on the reverse side, stated in fine print: “The liability, if any, for loss or damage to
checked baggage or for delay in the delivery thereof is limited to its value and, unless the
passenger declares in advance a higher valuation and pay an additional charge therefor, the
value shall be conclusively deemed not to exceed P100.00 for each ticket.”

PAL maintains that in view of the failure of the Shewaram to declare a higher value for his
luggage, and pay the freight on the basis of said declared value when he checked such luggage
at the Zamboanga City airport, pursuant to the abovequoted condition, appellee can not
demand payment from the appellant of an amount in excess of P100.00.

ISSUE: 
WON the limited liability rule shall apply in the case at bar.

HELD:
NO. The limited liability rule shall not apply.

Since this is a stipulation on qualified liability, which operates to reduce the liability of the carrier,
the carrier and the shipper must agree thereupon. Otherwise, the carrier will be liable for full.
PAL is fully liable (for full) because Shewaran did not agree to the stipulation on the ticket, as
manifested by the fact that Shewaram did not sign the ticket. Ticket should have been signed.

Article 1750 of the New Civil Code which provides as follows: A contract fixing the sum that may
be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is
valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed
upon.

In accordance with the above-quoted provision of Article 1750 of the New Civil Code, the
pecuniary liability of a common carrier may, by contract, be limited to a fixed amount. It is
required, however, that the contract must be "reasonable and just under the circumstances and
has been fairly and freely agreed upon."